Elizabeth Warren: Right Idea, Wrong Perspective

Today, the left-wing world is all excited about a viral quote/video clip from Massachusetts Senatorial candidate Elizabeth Warren. It is very well worth it to read and truly understand the quote, because it really is almost perfect, in much the same way that an “almost perfect” bowling throw leaves a 7-10 split instead of hitting a strike. It expresses a laudable underlying sentiment, while at the same time illustrating why people with her thought process are exactly the wrong people to try to solve the problem.

Here’s the quote:

“You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

“Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

I can certainly unite around the basic sentiment Warren portrays here: The relationship between the private sector and the government needs to be a symbiotic one, and not a parasitic one. That facet is excellent, and it draws people in.

Here’s where Warren misses: While the relationship between the government and private sector is parasitic, government is the parasite. (*)

The core of the issue is this: Government creates nothing on its own. All people who work for the government or are otherwise supported by the government cannot thrive without someone creating wealth for government to tax. All those roads that were built came from taxpayer money. All those policemen are paid with taxpayer money. Most of those schools where the workers were trained came from taxpayer money.

If the above were the only sorts of things government did, nobody would have a problem with that. However, now the government provides welfare checks, Social Security checks, food stamps, unemployment insurance and health care (among other things) to those who are producing nothing in return. One can certainly argue what the boundaries of these programs should be – I’m not suggesting they shouldn’t exist or that it is wrong for some people to receive these benefits — but the point is that all of these programs are there, and it is the people who create wealth (i.e. those in the private sector) who have to pay for them. (**)

Government certainly can assist the private sector in the ways Warren suggests and more. It cannot do it, however, without the resources the private sector provides. Government can also help the private sector by mediating disputes and clearing obstacles – the problem is that the government as it is currently constituted excels at creating obstacles instead of clearing them. Regulations on the kinds of light bulbs we can buy, the kinds of cars we can drive, allowing foreign countries to drill for oil in the Gulf of Mexico while banning our own oil companies from doing the same – these are the sorts of things where government could aid our private sector greatly simply by ceasing to do them. Instead, it chooses to get in the way of the private sector for its own political benefit, and it hurts us all, in much the same way that a parasite consuming too much of its host’s resources kills the host.

In short, Warren’s basic sentiment is a nice one, but her view of the problem is greatly distorted. The current administration’s view is identical to this, and it is failing for precisely that reason. The answer is not to take more from the private sector to increase government size; it is to get government out of the way to let the private sector prosper. It is only in that direction that the relationship between the private sector and the government can be healthy and symbiotic.

(*) — Of course, one can cite plenty of examples of big corporations getting government money and bailouts and such. These are examples of corruption in the system that needs to be cleaned out, not of the system itself. It’s also a “politicians vs. the people” issue, not a “Republican vs. Democrat” or “liberal vs. conservative” issue, as illustrated by the fact that the Tea Party is as much against Wall Street bailouts as the radical leftists are.

(**) — On top of that, according to IRS data, the top 5% of wage earners pay over half of the income taxes, while the bottom 45% pays nothing. So Warren’s definition of “the rest of us” is quite flawed. It also illustrates the other problem in Warren’s statement: the idea that the achievers aren’t “paying it forward” is without merit.